EXHIBIT (C)(2)
REORGANIZATION AGREEMENT
BY AND AMONG
DAKA INTERNATIONAL, INC.
DAKA, INC.
UNIQUE CASUAL RESTAURANTS, INC.
COMPASS GROUP PLC
AND
COMPASS HOLDINGS, INC.
MAY 27, 1997
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section 1.1 General......................................................................................... 2
Section 1.2 References to Time.............................................................................. 5
ARTICLE II
CONTRIBUTION AND ASSUMPTION OF ASSETS AND LIABILITIES
Section 2.1 Contribution.................................................................................... 5
Section 2.2 Transfer and Assumption......................................................................... 6
Section 2.3 Nonassignable Contracts......................................................................... 6
Section 2.4 Pro-Ration of Items as of the Offer Closing Date................................................ 7
ARTICLE III
RECAPITALIZATION OF UCRI; THE DISTRIBUTION
Section 3.1 UCRI Capitalization............................................................................. 7
Section 3.2 Recapitalization of UCRI........................................................................ 7
Section 3.3 Effectiveness of the Distribution............................................................... 7
Section 3.4 Mechanics of the Distribution................................................................... 7
Section 3.5 Cooperation..................................................................................... 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of UCRI.......................................................... 9
Section 4.2 Representations and Warranties of International and Daka........................................ 9
ARTICLE V
CERTAIN ADDITIONAL COVENANTS
Section 5.1 UCRI Board...................................................................................... 10
Section 5.2 Contractual Arrangements........................................................................ 10
Section 5.3 Intercompany Services........................................................................... 11
Section 5.4 Insurance....................................................................................... 11
ARTICLE VI
ACCESS TO INFORMATION
Section 6.1 Provision of Corporate Records.................................................................. 11
Section 6.2 Access to Information........................................................................... 12
Section 6.3 Retention of Records............................................................................ 13
Section 6.4 Confidentiality................................................................................. 13
Section 6.5 Reimbursement................................................................................... 14
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PAGE
ARTICLE VII
EMPLOYMENT; EMPLOYEE BENEFITS; LABOR MATTERS
Section 7.1 Employment Matters.............................................................................. 14
Section 7.2 Daka Savings Plan............................................................................... 14
Section 7.3 Welfare Plans................................................................................... 14
Section 7.4 Stock Options and Employee Stock Purchase Plan.................................................. 16
(a) Employee and Director Stock Options......................................................... 16
(b) Adjustment of International Options......................................................... 16
Section 7.5 Transfer to UCRI of Corporate-Owned Life Insurance Policies..................................... 17
Section 7.6 Vacation Pay and Sick Leave Pay................................................................. 17
Section 7.7 Change of Plan Sponsor.......................................................................... 17
Section 7.8 Severance Pay................................................................................... 18
Section 7.9 Collective Bargaining Agreements; Labor Relations Matters; Withdrawal Liability................. 18
Section 7.10 Preservation of Rights to Amend or Terminate Benefit Plans...................................... 19
Section 7.11 Other Liabilities............................................................................... 19
Section 7.12 Compliance...................................................................................... 19
ARTICLE VIII
TAX MATTERS
Section 8.1 Tax Matters..................................................................................... 20
ARTICLE IX
CONDITIONS
Section 9.1 Conditions to Obligations of International...................................................... 20
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Further Assurances.............................................................................. 21
Section 10.2 Survival of Agreements.......................................................................... 22
Section 10.3 Entire Agreement................................................................................ 22
Section 10.4 Expenses........................................................................................ 22
Section 10.5 Governing Law................................................................................... 22
Section 10.6 Notices......................................................................................... 22
Section 10.7 Amendment and Modification...................................................................... 23
Section 10.8 Successors and Assigns; No Third-Party Beneficiaries............................................ 23
Section 10.9 Enforcement..................................................................................... 23
(a) Specific Performance........................................................................ 23
(b) Jurisdiction................................................................................ 23
Section 10.10 Counterparts.................................................................................... 23
Section 10.11 Interpretation.................................................................................. 23
Section 10.12 Termination..................................................................................... 24
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List of Schedules:
Schedule 1.1(a) List of Foodservice Assets
Schedule 1.1(b) List of Foodservice Employees
Schedule 7.6 List of Benefit Plans
Schedule 7.8 List of Collective Bargaining Agreements retained by International and the International
Affiliated Group
List of Exhibits:
Exhibit 5.1(b) Form of Indemnification Agreement
Exhibit 9.1(c)(i) Form of Xxxxx Xxxxx Mulliss & Xxxxx, L.L.P. Legal Opinion
Exhibit Form of Freshfields Legal Opinion
9.1(c)(ii)
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REORGANIZATION AGREEMENT
This Reorganization Agreement (the "Agreement") is dated as of May 27,
1997, by and among DAKA INTERNATIONAL, INC., a Delaware corporation
("International"), DAKA, INC., a Massachusetts corporation ("Daka"), UNIQUE
CASUAL RESTAURANTS, INC., a Delaware corporation ("UCRI"), COMPASS GROUP PLC, a
public limited company incorporated in England and Wales ("Compass") and COMPASS
HOLDINGS, INC., a Delaware corporation ("Compass Holdings").
RECITALS:
WHEREAS, International owns all of the issued and outstanding capital stock
of Daka and all of the issued and outstanding capital stock of UCRI; and
WHEREAS, the Boards of Directors of International and Daka each have
approved, and International has entered into, an Agreement and Plan of Merger,
dated as of the date hereof (the "Merger Agreement") by and among International,
Compass, Compass Holdings and Compass Interim, Inc., a Delaware corporation
("Compass Interim"), pursuant to which this Agreement and certain other related
agreements will be executed to accomplish the following transactions:
(i) Compass Holdings will offer to purchase for cash all of the shares
of International Common Stock subject only to the Offer Conditions
set forth in Exhibit 1.1(a) of the Merger Agreement (the "Offer");
(ii) Immediately prior to the Distribution (as defined below), (a)
Daka will distribute certain assets to International as
dividends; (b) International will assume certain liabilities of
Daka; (c) International will contribute certain assets to UCRI as
capital contributions; and (d) UCRI will assume certain
liabilities of International (the transactions described in
clauses (a), (b), (c) and (d) above are referred to collectively
as the "Contribution");
(iii) International will distribute on a pro rata basis (the
"Distribution") all of the issued and outstanding shares of $.01
par value common stock, of UCRI (the "UCRI Common Stock") to the
holders of $.01 par value common stock of International (the
"International Common Stock"); and
(iv) Compass Interim will merge with and into International (the
"Merger").
WHEREAS, the purpose of the Contribution and the Distribution is to make
possible the Merger by divesting International and Daka of businesses and
operations to be conducted by UCRI and the Restaurant Subsidiaries (as defined
below), which Compass is unwilling to acquire;
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code"), and this Agreement is intended to
be and is adopted as a plan of reorganization thereunder;
WHEREAS, the parties hereto have determined that it is necessary and
desirable to set forth the principal corporate transactions required to effect
the Contribution, the Distribution and the other transactions contemplated
hereby and to set forth other agreements and the relationship of the parties
following the Contribution, the Distribution, and such other transactions;
NOW THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained in this Agreement, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 GENERAL. Capitalized terms used in this Agreement not otherwise
defined herein shall have the meanings assigned thereto in the Merger Agreement.
As used in this Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Action" means any action, claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any arbitration or other tribunal.
"Assignment and Assumption Agreement" has the meaning set forth in Section
5.2 of this Agreement.
"Assumed Daka Liabilities" means, collectively, all Liabilities of Daka,
including but not limited to those Liabilities of Daka reflected within the
financial ledgers of Daka denoted as companies 11 and 14, except the Foodservice
Liabilities.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions located in the Commonwealth of Massachusetts are
obligated by law or executive order to close.
"CDV" means Casual Dining Ventures, Inc., a Delaware corporation.
"Champps" means Champps Entertainment, Inc., a Minnesota corporation.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.
"Collective Bargaining Agreement" means those collective bargaining and
other labor agreements listed on Schedule 4.2(k)(iv)(C).
"Contributed Assets" means, collectively, all of those assets and
properties, tangible or intangible, of any kind and description of International
other than the Foodservice Assets (including but not limited to the Distributed
Assets and the stock of the Restaurant Subsidiaries
"Xxxx Xxxx of Sale" has the meaning set forth in Section 5.2(a) of this
Agreement.
"Distributed Assets" means all of the assets and properties, tangible or
intangible of any kind and description of Daka other than Foodservice Assets.
"Foodservice Assets" means all of the assets and properties, tangible and
intangible, listed on Schedule 1.1(a).
"Foodservice Employee" means (i) any individual who at the Offer Closing
Time is an officer or employee of any member of either Group and who is set
forth on Schedule 1.1(b) hereof (which Schedule will be updated by mutual
agreement of UCRI and Compass prior to the Offer Closing Time), and (ii) all
employees of Daka as of the Offer Closing Time, a list of whom shall be provided
by International to Compass prior to the Offer Closing Time pursuant to Section
7.1(b) excluding any employee of International or Daka located at each such
company's headquarters in Danvers, Massachusetts unless included on Schedule
1.1(b). Schedule 1.1(b) and the list provided under Section 7.1(b) shall include
a list of officers or employees actively at work and a list of individuals not
actively at work but on (i) approved leave (including, without limitation,
leaves of absence granted by reason of family leave, medical leave, short-term
disability leave, and maternity or paternity leave, in all cases which began
before the Offer Closing Time) who may become Foodservice Employees upon their
written notice to International that they are available to work or (ii) layoff
(with recall rights) from active employment, other than any individual who, as
of the Offer Closing Time, has been determined to be permanently disabled under
existing Benefit Plans of International.
"Foodservice Liabilities" means the following liabilities: (i) the Funded
Debt (as defined in Section 5.1(f) (ii) of the Merger Agreement), (ii) all
obligations of performance or payment relating to or arising after the Offer
Closing Time from the Foodservice Assets and the conduct of the Foodservice
Business (as defined in the preamble to the Merger Agreement) to be performed or
paid by the terms thereof after the Offer Closing Time, except for each of those
purchase contracts between International and Coca-Cola, Xxxx Xxxxxx and Bunge,
(iii) all Liabilities relating to the employment of all Foodservice Employees
after the Offer Closing Time, and (iv) the monetary obligations of Compass under
the Series A Preferred Stock Purchase Agreement (as defined in the Merger
Agreement).
"French Quarter" means French Quarter Coffee Co., a Delaware corporation.
"Fuddruckers" means Fuddruckers, Inc., a Texas corporation.
"Great Bagel" means The Great Bagel and Coffee Company, a Delaware
corporation.
"Group" means the UCRI Group or the International Group.
"Information" has the meaning set forth in Section 6.2 of this Agreement.
"Information Statement" means the information statement to be sent to the
holders of International Common Stock in connection with the Distribution.
"Intellectual Property Agreement" means those agreements pursuant to which
International and UCRI are providing for the right of Daka to use the "French
Quarter Coffee," "Good Natured Cafe" and "Leo's Deli" names and marks.
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"International Xxxx of Sale" has the meaning set forth in Section 5.2(b) of
this Agreement.
"International Board" means the Board of Directors of International and
their duly elected or appointed successors.
"International Business" means any business conducted by any member of the
International Group immediately following the Offer Closing Time.
"International Documents" has the meaning set forth in Section 4.2(b) of
this Agreement.
"International Group" means International, Daka and Daka's Subsidiaries.
"International Options" has the meaning set forth in Section 7.4 of this
Agreement.
"La Salsa" means La Salsa Holding Co., a California corporation.
"Liabilities" means collectively claims, debts, liabilities, royalties,
license fees, losses, costs, expenses, deficiencies, litigation proceedings,
taxes, levies, imposts, duties, deficiencies, assessments, attorneys' fees,
charges, allegations, demands, damages, judgments or obligations, whether
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown and whether or not the same would
properly be reflected on a balance sheet, including all costs and expenses
relating thereto.
"Pulseback" means Pulseback, Inc., a Vermont corporation.
"Qualified Plan" means a Benefit Plan which is an employee pension benefit
plan (within the meaning of Section 3(2) of ERISA) and which constitutes or is
intended in good faith to constitute a qualified plan under Section 401(a) of
the Code.
"Record Date" means the date to be determined by the International Board,
as the record date for determining shareholders of International Common Stock
entitled to receive the Distribution.
"Restaurant Subsidiaries" means, collectively, CDV, Champps, French
Quarter, Fuddruckers, Great Bagel, Pulseback, Specialty Concepts, and La Salsa
and their Subsidiaries.
"Specialty Concepts" means Specialty Concepts, Inc., a Delaware
corporation.
"UCRI Assets" means all of the assets and properties, tangible and
intangible, of any kind, nature and scope, used or held by any member of either
Group immediately prior to the Offer Closing Time, except for the Foodservice
Assets.
"UCRI Business" means all businesses and activities conducted by any member
of either Group immediately prior to the Offer Closing Time, except for the
Foodservice Business.
"UCRI Documents" has the meaning set forth in Section 4.1(b) of this
Agreement.
"UCRI Employee" means any individual who at any time is or was an officer
or employee of any member of either Group, other than an Foodservice Employee.
"UCRI Group" means UCRI and all other Subsidiaries of UCRI.
"UCRI Liabilities" means (i) all Liabilities of either Group as of the
Offer Closing Time except the Foodservice Liabilities, (ii) all Liabilities
relating to or arising from the UCRI Business, (iii) all Liabilities relating to
the employment of all employees of either Group prior to the Offer Closing Time,
and (iv) all Assumed Daka Liabilities.
"Welfare Plan" means any Benefit Plan, which is not a Qualified Plan and
which provides medical, health, dental, disability, accident, life insurance,
death, dependent care or other welfare benefits, including any post-employment
non-cash benefits or retiree medical benefits.
SECTION 1.2 REFERENCES TO TIME. All references to times of the day in this
Agreement shall refer to Boston, Massachusetts time.
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ARTICLE II
CONTRIBUTION AND ASSUMPTION OF ASSETS AND LIABILITIES
SECTION 2.1 CONTRIBUTION. Subject to the terms and conditions of this
Agreement, International and UCRI shall cause, immediately prior to the
Distribution:
(a) all of Daka's right, title and interest in the Distributed Assets
to be conveyed, assigned, transferred and delivered to International as a
dividend;
(b) all of Daka's duties, obligations and responsibilities under the
Assumed Daka Liabilities to be assumed by International;
(c) all of International's equity interests in the Restaurant
Subsidiaries and any other direct Subsidiaries of International other than
Daka to be conveyed, assigned, transferred and delivered to UCRI as a
capital contribution;
(d) all of International's right, title and interest in the
Contributed Assets to be conveyed, assigned, transferred and delivered to
UCRI as a capital contribution;
(e) all of the UCRI Liabilities and duties, obligations and
responsibilities thereunder to be assumed by UCRI or its Subsidiaries.
SECTION 2.2 TRANSFER AND ASSUMPTION.
(a) In connection with the conveyance, assignment, transfer and
delivery of the assets and properties and the assumption of the Liabilities
as contemplated by this Article II, (i) International and UCRI shall
execute or cause to be executed by the appropriate parties and delivered to
the appropriate parties such deeds, bills of sale, stock powers,
certificates of title, assignments of leases and contracts and other
instruments of conveyance, assignment, transfer and delivery necessary to
evidence such conveyance, assignment, transfer and delivery and (ii)
International and UCRI will execute and deliver such instruments of
assumption as and to the extent necessary to evidence such assumption.
(b) Each of the parties shall use its best efforts prior to, as of and
after the Offer Closing Time to take, or cause to be taken, all actions,
and to do, or cause to be done, all things, reasonably necessary, proper or
advisable under applicable laws, regulations and agreements to consummate
and make effective the transactions contemplated by this Article II.
SECTION 2.3 NONASSIGNABLE CONTRACTS. Anything contained herein to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any lease, license agreement, contract, agreement, sales order, purchase
order, open bid or other commitment or asset if an assignment or attempted
assignment of the same without the consent of the other party or parties thereto
would constitute a breach thereof or in any way impair the rights of either
Group thereunder. International shall, prior to the Contribution, use its
reasonable best efforts to obtain all consents and waivers and to resolve all
impracticalities of assignments or transfers necessary to convey to UCRI and the
Restaurant Subsidiaries the assets discussed in Section 2.1. If any such consent
is not obtained or if an attempted assignment would be ineffective or would
impair either Group's rights under any such lease, license agreement, contract,
agreement, sales order, purchase order, open bid or other commitment or asset so
that UCRI or the Restaurant Subsidiaries would not receive such rights, then (i)
International shall use its reasonable best efforts to provide or cause to be
provided to UCRI or the appropriate Restaurant Subsidiary, to the extent
permitted by law, the benefits of any such lease, license agreement, contract,
agreement, sales order, purchase order, open bid or other commitment or asset,
and shall pay or cause to be paid to UCRI or the appropriate Restaurant
Subsidiary when received all moneys received by the International Group with
respect to any such lease, license agreement, contract, agreement, sales order,
purchase order, open bid or other commitment or asset and (ii) in consideration
thereof, UCRI or the appropriate Restaurant Subsidiary shall pay, perform and
discharge on behalf of the International Group all of the International Group's
debts, liabilities, obligations and commitments thereunder in a timely manner
and in accordance with the terms thereof. In addition, International shall take
such other actions as may be reasonably requested by UCRI in order to place
UCRI, insofar as reasonably possible, in the same position as if such lease,
license agreement, contract, agreement, sales order, purchase order, open bid or
other commitment or Asset had been transferred as contemplated hereby and so all
the benefits and burdens relating thereto shall inure to the UCRI Group. If and
when such consents and approvals are obtained, the transfer of the applicable
Asset shall be effected in accordance with the terms of this Agreement.
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SECTION 2.4 PRO-RATION OF ITEMS AS OF THE OFFER CLOSING DATE. In connection
with all determinations to be made pursuant to this Agreement, the following
principles shall be applied with respect to the allocation of items between the
UCRI Business and the International Business:
(a) All accrued operating income and operating expense items of the
Foodservice Business shall be adjusted and allocated between UCRI and
International to the extent necessary to reflect the principle that all
such income and expenses attributable to the operation of the Foodservice
Business on or before the Offer Closing Time shall be for the account of
UCRI and all such income and expenses attributable to the operation of the
Foodservice Business after the Offer Closing Time shall be for the account
of International;
(b) All expenses that relate to services, facilities, personnel or
other matters provided for in the Transition Agreement as defined in the
Post-Closing Covenants Agreement shall be allocated in accordance with such
agreement without regard to generally accepted accounting principles or
other criteria; and
(c) to the extent not inconsistent with the express provisions of this
Agreement, the allocation provided in clause (a) above shall be made in
accordance with GAAP (as defined in the Post-Closing Covenants Agreement).
ARTICLE III
RECAPITALIZATION OF UCRI; THE DISTRIBUTION
SECTION 3.1 UCRI CAPITALIZATION. The authorized number of shares of capital
shares of capital stock of UCRI is 35,000,000 shares, consisting of 5,000,000
shares of Preferred Stock, $.01 par value, and 30,000,000 shares of UCRI Common
Stock. The current equity capitalization of UCRI consists of 1,000 issued and
outstanding shares of UCRI Common Stock (the "Existing UCRI Common Stock"), all
of which is owned beneficially and of record by International.
SECTION 3.2 RECAPITALIZATION OF UCRI. Immediately prior to the Offer
Closing Time, International shall cause UCRI to exchange the Existing UCRI
Common Stock owned by International for a total number of shares of UCRI Common
Stock equal to the total number of shares of International Common Stock
outstanding as of the Record Date.
SECTION 3.3 EFFECTIVENESS OF THE DISTRIBUTION. The Distribution shall be
effective as of the Offer Closing Time.
SECTION 3.4 MECHANICS OF THE DISTRIBUTION. Immediately before the Offer
Closing Time, International shall distribute all outstanding shares of UCRI
Common Stock to holders of record of International Common Stock on the Record
Date on the basis of one share of UCRI Common Stock for each share of
International Common Stock outstanding on the Record Date. All shares of UCRI
Common Stock issued in the Distribution shall be duly authorized, validly
issued, fully paid and nonassessable.
SECTION 3.5 COOPERATION.
(a) As promptly as practicable after the date hereof and not later than 10
business days prior to the Offer Closing Time:
(i) International and UCRI shall prepare, and International shall file
with the SEC and mail to the holders of the equity securities of the
International, the Information Statement, which shall set forth appropriate
disclosure concerning UCRI and its Subsidiaries, the UCRI Assets, the
Contribution, the Distribution and certain other matters. International and
UCRI shall also prepare, and International shall file with the SEC, the
Form 10 which shall include or incorporate by reference the Information
Statement and International and UCRI shall use reasonable efforts to cause
the Form 10 to be declared effective under the Exchange Act.
(ii) International and UCRI shall cooperate in preparing, filing with
the SEC and causing to become effective any registration statements or
amendments thereto which are appropriate to reflect the establishment of,
or amendments to, any employee benefit and other plans contemplated by this
Agreement.
(iii) International and UCRI shall take all such action as may be
necessary or appropriate under state securities or "Blue Sky " laws in
connection with the transactions contemplated by this Agreement.
(iv) International and UCRI shall prepare, and UCRI shall file and
seek to make effective, an application to permit listing of the UCRI Common
Stock on the Nasdaq National Market.
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(b) In addition to the actions specifically provided for elsewhere in this
Agreement, each of the parties hereto shall use its best efforts prior to, as of
and after the Offer Closing Time to take, or cause to be taken, all actions, and
to do, or cause to be done, all things, reasonably necessary, proper or
advisable under applicable laws, regulations and agreements to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation, using its best efforts to obtain the consents and approvals,
to enter into any amendatory agreements and to make the filings and applications
necessary or desirable to have been obtained, entered into or made in order to
consummate the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF UCRI. UCRI hereby represents
and warrants to International, Daka and Compass as follows:
(a) ORGANIZATION, STANDING AND POWER. UCRI is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. UCRI has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as
now being conducted.
(b) AUTHORITY. UCRI has all requisite power and authority to
execute this Agreement and the Ancillary Agreements to which it is or
will be party (collectively, the "UCRI Documents") and to consummate the
transactions contemplated hereby and thereby. The execution and delivery
of this Agreement and the other UCRI Documents and the consummation of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of UCRI. This Agreement
has been duly executed and delivered by UCRI, and each of the other UCRI
Documents will be duly executed and delivered by UCRI at or prior to the
Offer Closing Time, and when so executed and delivered will constitute,
a legal, valid and binding obligation of UCRI enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium, fraudulent conveyance, or similar laws relating to
creditors' rights and general principles of equity.
(c) NO CONFLICT. The execution, delivery and performance by UCRI of
this Agreement and by UCRI of the other UCRI Documents will not
contravene, violate, result in a breach of or constitute a default under
(i) any provision of applicable law or of the articles of incorporation
or bylaws of UCRI or any other member of the UCRI Group or (ii) any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to UCRI or any other member of the UCRI Group or any of their
properties or Assets.
(d) APPROVALS. No consent, approval, order, authorization of, or
registration, declaration or filing with, any governmental entity is
required in connection with the making or performance by UCRI of this
Agreement or the other UCRI Documents, except as set forth in the Merger
Agreement.
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF INTERNATIONAL AND DAKA. Each
of International and Daka, jointly and severally, hereby represents and warrants
to UCRI as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of International and
Daka is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation. Each of
International and Daka has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as
now being conducted.
(b) AUTHORITY. Each of International and Daka has all requisite
power and authority to execute this Agreement and the Ancillary
Agreements to which it is or will be party (collectively, the
"International Documents") and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the other International Documents and the consummation of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of International or Daka,
as appropriate. This Agreement has been duly executed and delivered by
each of International and Daka, and each of the other International
Documents will be duly executed and delivered by International and/or
Daka, as appropriate, at or prior to the Offer Closing Time, and when so
executed and delivered will constitute, a legal, valid and binding
obligation of International and/or Daka enforceable against
International and/or Daka in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, or
similar laws relating to creditors' rights and general principles of
equity.
6
(c) NO CONFLICT. The execution, delivery and performance by
International and Daka of this Agreement and by International and Daka
of the other International Documents will not contravene, violate,
result in a breach of or constitute a default under (i) any provision of
applicable law or of the articles of incorporation or bylaws of
International or Daka or (ii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to International or Daka or any
of their properties or assets.
(d) APPROVALS. No consent, approval, order, authorization of, or
registration, declaration or filing with, any governmental entity is
required in connection with the making or performance by International
or Daka of this Agreement or the other International Documents, except
as set forth in the Merger Agreement.
ARTICLE V
CERTAIN ADDITIONAL COVENANTS
SECTION 5.1 UCRI BOARD. Prior to the Offer Closing Time, International
shall (a) take such actions as are necessary such that UCRI's Board of Directors
is comprised of those individuals named as directors in the Information
Statement and (b) execute for the benefit of all directors and officers named in
Schedule 5.1(b) an indemnification agreement substantially in the form of
Exhibit 5.1(b) hereto.
SECTION 5.2 CONTRACTUAL ARRANGEMENTS. At the Closing, effective immediately
prior to the Offer Closing Time,
(a) Daka shall execute and deliver to International a Xxxx of Sale,
in a form mutually reasonably agreed to between UCRI and Compass (the
"Xxxx Xxxx of Sale");
(b) International shall execute and deliver to UCRI a Xxxx of Sale,
in a form mutually reasonably agreed to between UCRI and Compass (the
"International Xxxx of Sale");
(c) UCRI, International and Daka shall enter into an Assignment and
Assumption Agreement in a form mutually reasonably agreed to between
UCRI and Compass regarding the UCRI Assets and the UCRI Liabilities (the
"Assignment and Assumption Agreement");
(d) UCRI, International, Daka and Compass shall enter into license
agreements in forms mutually reasonably agreed to among them with regard
to the use, without charge, by Compass or its Subsidiaries of the
"French Quarter Coffee," "Good Natured Cafe" and "Leo's Deli" names and
marks.
SECTION 5.3 INTERCOMPANY SERVICES. All intercompany services provided by
the UCRI Group to the International Group or by the International Group to the
UCRI Group shall terminate as of the Offer Closing Time unless otherwise
provided in any Ancillary Agreement or any other agreement contemplated thereby
or hereby.
SECTION 5.4 INSURANCE.
(a) Prior to the Offer Closing Time, UCRI will amend or otherwise
modify all insurance policies and related insuring agreements pertaining
to the Foodservice Assets (the "Insurance Policies") to reflect that all
reimbursement, premium payment or other obligations and assets, as
applicable, of International based on occurrences prior to the Offer
Closing Time will become obligations of UCRI under the Insurance
Policies as of the Offer Closing Time. UCRI will pay all required
premiums and other payment or reimbursement obligations arising under
the Insurance Policies and will be responsible for all correspondence
with the insurance companies and will provide assistance to the
insurance companies with the administration of any and all claims under
the Insurance Policies.
(b) Notwithstanding the provisions of subparagraph (a) above, UCRI
shall cause each of International and Daka to remain as named insureds
without cost to such entities under the Insurance Policies.
ARTICLE VI
ACCESS TO INFORMATION
SECTION 6.1 PROVISION OF CORPORATE RECORDS.
(a) Prior to or as promptly as practicable after the Offer Closing
Time, International shall deliver to UCRI all corporate books and
records of the UCRI Group as well as copies or, to the extent not
detrimental
7
in the reasonable opinion of International to the interests of
International, originals, of all books, records and data relating
exclusively to the UCRI Assets, the UCRI Business, or the UCRI
Liabilities, including, but not limited to, all books, records and data
relating to the purchase of materials, supplies and services, financial
results, sale of products, records of the UCRI Employees, commercial
data, research done by or for UCRI, catalogues, brochures, training and
other manuals, sales literature, advertising and other sales and
promotional materials, maintenance records and drawings, all active
agreements, active litigation files and government filings. To the
extent that originals of such books, records and data are provided to
UCRI, UCRI shall provide International copies thereof as reasonably
requested in writing by International. Notwithstanding the above,
International shall provide copies of customer information, invoices and
credit information only to the extent reasonably requested in writing by
UCRI, and International shall provide such copies of all books, records
and data only to the extent that such action is not prohibited by the
terms of any agreements pertaining to such information or is not
prohibited by law. International or UCRI agrees to advise Compass of any
such contractual or legal prohibitions and to indemnify Compass pursuant
to Article II of the Post-Closing Covenants Agreement for any
Indemnifiable Losses incurred by Compass as a result thereof. After the
Offer Closing Time, all books, records and copies so delivered shall be
the property of UCRI. Notwithstanding the above, International shall not
be required to make copies, other than pursuant to Section 6.2 of this
Agreement, of any portion of any books, records or data to the extent
such portion relates exclusively to the Foodservice Assets, the
Foodservice Business or to Foodservice Liabilities.
(b) Prior to or as promptly as practicable after the Offer Closing
Time, UCRI shall deliver to International all corporate books and
records of International Group as well as copies or, to the extent not
detrimental in the reasonable opinion of UCRI to the interests of UCRI,
originals, of all books, records and data relating exclusively to the
Foodservice Assets; the Foodservice Business, or the Foodservice
Liabilities, including, but not limited to, all books, records and data
relating to the purchase of materials, supplies and services, financial
results, sale of products, records of the Foodservice Employees,
commercial data, research done by or for International, catalogues,
brochures, training and other manuals, sales literature, advertising and
other sales and promotional materials, maintenance records and drawings,
all active agreements, active litigation files and government filings.
To the extent that originals of such books, records and data are
provided to International, International shall provide UCRI copies
thereof as reasonably requested in writing by UCRI. Notwithstanding the
above, UCRI shall provide copies of customer information, invoices and
credit information only to the extent reasonably requested in writing by
International, and UCRI shall provide such copies of all books, records
and data only to the extent that such action is not prohibited by the
terms of any agreements pertaining to such information or is not
prohibited by law. From and after the Offer Closing Time, all books,
records and copies so delivered shall be the property of International.
Notwithstanding the above, UCRI shall not be required to make copies,
other than pursuant to Section 6.2 of this Agreement, of any portion of
any books, records or data to the extent such portion relates
exclusively to the UCRI Assets, the UCRI Business or to UCRI
Liabilities.
SECTION 6.2 ACCESS TO INFORMATION. After the Offer Closing Time, each of
International and UCRI shall afford to the other and to the other's agents,
employees, accountants, counsel and other designated representatives, reasonable
access and duplicating rights during normal business hours to all records,
books, contracts, instruments, computer and other information ("Information")
within such party's (including all Subsidiaries') possession relating to such
other party's businesses, assets or liabilities, insofar as such access is
reasonably required by such other party. Without limiting the foregoing, such
Information may be requested under this Section for audit, accounting, claims,
litigation and tax purposes, as well as for purposes of fulfilling disclosure
and reporting obligations.
SECTION 6.3 RETENTION OF RECORDS. Except as otherwise required by law or
agreed in writing, or as otherwise provided in the Tax Allocation Agreement,
each of International and UCRI shall retain, for a period of at least one year
following the Offer Closing Time, all significant Information in such party's
possession or under its control relating to the business, assets or liabilities
of the other party and, after the expiration of such one-year period, prior to
destroying or disposing of any of such Information, (a) the party proposing to
dispose of or destroy any such Information shall provide no less than 30 days
prior written notice to the other party, specifying the Information proposed to
be destroyed or disposed of, and (b) if, prior to the scheduled date for such
destruction or disposal, the other party requests in writing that any of the
Information proposed to be destroyed or disposed of be delivered to such other
party, the party proposing to dispose of or destroy such Information promptly
shall arrange for the delivery of the requested Information to a location
specified by, and at the expense of, the requesting party.
8
SECTION 6.4 CONFIDENTIALITY.
(a) Except as required by law or regulation, each Group will hold,
and will cause its respective officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to hold, any
nonpublic information in confidence in accordance with the
Confidentiality Agreement, dated January 2, 1997, between Compass and
International.
(b) After the Offer Closing Time, each Group shall hold, in strict
confidence, all Information obtained from the other Group prior to the
Offer Closing Time or furnished to it pursuant to this Agreement or any
other agreement referred to herein which relates to or concerns the
business conducted by such other Group, and such Information shall not
be used by it to the detriment of the other Group, or disclosed by it or
its agents, officers, employees or directors without the prior written
consent of such other Group unless and to the extent that (a) disclosure
is compelled by judicial or administrative process or, in the opinion of
such Group's counsel, by other requirements of law, or (b) such Group
can show that such Information was (i) available to such Group on a
nonconfidential basis prior to its disclosure by the other Group, (ii)
in the public domain through no fault of such Group, (iii) lawfully
acquired by such Group from other sources after the time that it was
furnished to such Group pursuant to this Agreement or any other
agreement referred to herein, or (iv) independently developed by such
Group. Notwithstanding the foregoing, each Group shall be deemed to have
satisfied its obligations of confidentiality under this Section with
respect to any Information concerning or supplied by the other Group if
it exercises substantially the same care with regard to such Information
as it takes to preserve confidentiality for its own similar Information.
SECTION 6.5 REIMBURSEMENT. Each member of any Group providing Information
pursuant to Sections 6.2 or 6.3 to any member of the other Group shall be
entitled to receive from the recipient, upon presentation of an invoice
therefor, payment of all out-of-pocket costs and expenses as may reasonably be
incurred in providing such Information.
ARTICLE VII
EMPLOYMENT; EMPLOYEE BENEFITS; LABOR MATTERS
SECTION 7.1 EMPLOYMENT MATTERS.
(a) Compass Holdings agrees to cause International or Daka to offer
to retain all Foodservice Employees as of 12:01 a.m. on the Offer
Closing Date. Notwithstanding the foregoing, nothing contained herein
shall be construed as obligating Compass Holdings, International or any
of its affiliates (i) to offer employment after the Offer Closing Date
to any employee whose employment with International or Daka terminates
for any reason prior to the Offer Closing Date, (ii) to offer any term
or condition of employment (including base salary and other benefits)
except as provided by this Article or to maintain any such term or
condition for any period following the Offer Closing Date, or (iii) to
recall any employee who does not have recall rights.
(b) Prior to the Offer Closing Time, International shall furnish
Compass or Compass Holdings with (i) a list of all officers or employees
of Daka as of the Offer Closing Time and (ii) information as to (x) the
rate of base salary in effect for each Foodservice Employee immediately
before the Offer Closing Time, (y) each Foodservice Employee's position
with International immediately before the Offer Closing Time and (z)
each Foodservice Employee's prior service with International or Daka as
of the Offer Closing Time.
SECTION 7.2 DAKA SAVINGS PLAN. International shall take, or cause to be
taken, all actions necessary and appropriate to amend the Daka Savings and
Retirement Plan (the "Daka Savings Plan") to remove International as sponsor and
named fiduciary and shall name UCRI as sponsor and named fiduciary of the Daka
Savings Plan prior to the Offer Closing Time. International shall also take such
actions as necessary to fully vest as of the Offer Closing Time each participant
who is an Foodservice Employee in his or her account balance under the Daka
Savings Plan.
SECTION 7.3 WELFARE PLANS.
(a) International shall take, or cause to be taken, all actions
necessary and appropriate to amend each and every Welfare Plan covering
its employees ("International Welfare Plans") to remove International as
sponsor and named fiduciary and shall name UCRI as sponsor and named
fiduciary of each such Benefit Plan prior to the Offer Closing Time.
Compass shall take, or cause to be taken, all actions necessary and
appropriate to cause either (i) its existing welfare benefit plans to be
amended, or (ii) new welfare benefit plans to be
9
adopted which will cover the Foodservice Employees who were covered by
the International Welfare Plans as of the Offer Closing Time (and their
dependents as appropriate) immediately following the Offer Closing Time
(the "New Welfare Plans"). Compass shall cause the New Welfare Plans to
provide benefits similar to the benefits available to the eligible
Foodservice Employees under the International Welfare Plans on the date
immediately preceding the Offer Closing Time including waiving any
pre-existing condition requirement unless such requirement applied to
such Foodservice Employee under the International Welfare Plans. Compass
shall also cause the New Welfare Plans, to the extent applicable, to
credit such Foodservice Employees with the term of service credited to
such employees as of the Offer Closing Time under the terms of the
applicable International Welfare Plan. Compass will cause the
Foodservice Employees to receive credit for payments made under any of
the International Welfare Plans during the plan year in which the Offer
Closing Time occurs for purposes of satisfying the applicable
deductibles, employee co-payments and maximum out-of-pocket limits of
the applicable New Welfare Plans during the plan year in which the Offer
Closing Time occurs.
(b) Except as otherwise noted in this Section 7.3, International
shall cause one or more members of the UCRI Group to assume and be
solely responsible for, or cause its insurance carriers or agents to be
responsible for, all liabilities for welfare benefit claims incurred
prior to the Offer Closing Time under the International Welfare Plans.
For purposes of this Section 7.3, disability claims are incurred on the
date on which the disability is incurred or, in the case of a disability
which is not incurred on a single, identifiable date, the date on which
the disability was diagnosed; medical and dental services are incurred
when an individual is provided with medical or dental care; death
benefit claims are incurred at the time of death of the insured, all
notwithstanding any other provision of any welfare benefit plan to the
contrary. At the Offer Closing Time, the Foodservice Employees will
cease participation in the International Welfare Plans, except to the
extent (i) that a Foodservice Employee or a covered dependent of a
Foodservice Employee is hospitalized or otherwise not actively at work
and on approved leave as of the Offer Closing Time, in which case such
individual shall continue to be covered under the appropriate
International Welfare Plan until the individual is discharged from the
hospital or returns from approved leave or (ii) they elect continued
coverage under such plans pursuant to COBRA or other provisions of the
International Welfare Plans. UCRI shall be responsible for all
qualifying events under COBRA and COBRA claims incurred under the
International Welfare Plans prior to the Offer Closing Time or as a
result of the consummation of the transactions contemplated by this
Agreement or the Merger Agreement.
(c) UCRI and UCRI Group shall be responsible for any retiree
medical, life insurance or other benefits that are now or may hereafter
become payable with respect to any former employee of International or
one of its Affiliates who retired from the UCRI Group or the
International Group prior to the Offer Closing Time and who met the
eligibility requirements for such benefits at that time. The Foodservice
Employees who retire from International or Compass after the Offer
Closing Time shall not be entitled to retiree medical and life insurance
benefits from either the International Welfare Plans or the New Welfare
Plans.
SECTION 7.4 STOCK OPTIONS AND EMPLOYEE STOCK PURCHASE PLAN.
(a) EMPLOYEE AND DIRECTOR STOCK OPTIONS. Effective as of the Offer
Closing Time, UCRI shall adopt (and International, as sole shareholder
of UCRI, shall approve) a stock option and restricted stock plan (the
"UCRI Stock Plan") for the benefit of employees of UCRI, Foodservice
Employees and non-employee directors of UCRI (including those
non-employee directors of International who, following the Distribution,
will become non-employee directors of UCRI (the "Non-Employee
Directors")), which plan shall permit the adjustments contemplated in
Section 7.4(b) hereof and shall be administered so as to qualify under
Rule 16b-3 promulgated under the Exchange Act. Options to acquire
International Common Stock, regardless of whether such options have
vested in the individual holding such option, which have been granted to
UCRI Employees, Non-Employee Directors, Foodservice Employees and former
employees of International (other than UCRI Employees) pursuant to
International's 1994 Equity Incentive Plan, the 1988 Incentive Stock
Option Plan, the 1988 Nonqualified Stock Option Plan or the Senior
Executive Stock Option Plan (collectively, the "International Plans")
and which have not been exercised immediately prior to the Distribution
(collectively, the "International Options") shall, pursuant to the
equitable adjustment provisions of the applicable plan under which such
options were granted and effective as of the Offer Closing Time, be
treated as provided in this Section 7.4.
10
(b) ADJUSTMENT OF INTERNATIONAL OPTIONS. Each (X) International
Option not intending to qualify as an "incentive stock option" under
Section 422 of the Code (a "Nonqualified Stock Option") granted pursuant
to any of the International Plans and held by a UCRI Employee,
Foodservice Employee or Non-Employee Director , and (Y) International
Option intending to qualify as an "incentive stock option" under Section
422 of the Code (an "Incentive Stock Option") granted pursuant to any of
the International Plans and held by a UCRI Employee or a Foodservice
Employee , shall be adjusted to provide the option holder with an
adjusted Nonqualified Stock Option from the relevant International Plan
and a Nonqualified Stock Option from the UCRI Stock Plan, by the
following procedure (i) the option holder shall receive an adjusted
International Option under the relevant International Plan for the
number of shares of International Common Stock relating to the
Nonqualified Stock Option or Incentive Stock Option but at an exercise
price per share to be determined as described hereinafter, and (ii) the
option holder also shall receive an option under the UCRI Stock Plan to
acquire shares of UCRI Common Stock (a "UCRI Option"), in an amount
equal to the number of shares of International Common Stock relating to
the Nonqualified Stock Option or Incentive Stock Option at an exercise
price per share to be determined as described hereinafter. The exercise
price per share of each International Option which becomes an adjusted
Nonqualified Stock Option under the relevant International Plan shall be
equal to the quotient obtained by dividing (w) the exercise price per
share of such Nonqualified Stock Option or Incentive Stock Option prior
to adjustment (the "Pre-Adjustment Exercise Price") by (x) the
International Plan Adjustment Factor (as hereinafter defined), and the
exercise price per share of each Nonqualified Stock Option which, as a
result of the adjustments in this Section 7.4(b), provides the option
holder with an option under the UCRI Stock Plan to purchase UCRI Common
Stock, shall be equal to the quotient obtained by dividing (y) the
Pre-Adjustment Exercise Price by (z) the UCRI Stock Plan Adjustment
Factor (as hereinafter defined). In each case the resulting exercise
price per share shall be rounded up or down to the nearest cent. The
"International Plan Adjustment Factor " shall mean an amount equal to
the quotient obtained by dividing (1) the sum of (A) the Offer Price (as
defined in the Merger Agreement), plus (B) the per share fair market
value of UCRI Common Stock, determined based on the average closing
price of the UCRI Common Stock over the three-consecutive-day trading
period immediately following the Offer Closing Time (such per share fair
market value being referred to as the "UCRI Value"), by (2) the Offer
Price. The "UCRI Stock Plan Adjustment Factor" shall mean an amount
equal to the quotient obtained by dividing (1) the sum of (A) the Offer
Price plus (B) the UCRI Value, by (2) the UCRI Value. Each International
Option which becomes an adjusted Nonqualified Stock Option under the
relevant International Plan as a result of the adjustments in this
Section 7.4(b) shall remain subject to the same terms and conditions as
such Nonqualified Stock Option or Incentive Stock Option prior to such
adjustment, except that all International Options which prior to the
adjustments in this Section 7.4(b) were Incentive Stock Options shall be
Nonqualified Stock Options after such adjustment.
(c) DISPOSITION OF INTERNATIONAL OPTIONS. Following the adjustments
described in Section 7.4(b), all International Options shall be
cancelled and the option holders shall receive payment from UCRI for the
value of each option holders' International Options as provided in
Section 1.5 of the Merger Agreement.
(d) EMPLOYEE STOCK PURCHASE PLAN. Prior to the Offer Closing Time,
International shall take all actions necessary or appropriate under the
DAKA International Employee Stock Purchase Plan (the "Stock Purchase
Plan") to (i) cause the Offering (as that term is defined in the Stock
Purchase Plan) beginning on April 1, 1997 to end on the business day
immediately preceding the Record Date, (ii) permit no additional
Offerings under the Stock Purchase Plan to occur after the Record Date
and (iii) cause all shares of International Common Stock purchasable by
participating employees of International or its Subsidiaries (the
"Participating Employees") under the Stock Purchase Plan with respect to
such Offering (the "Purchasable Shares") to be deemed issued and
outstanding for purposes of the Distribution as of the Record Date,
whereby such participating employees will receive shares of UCRI as if
they had held the Purchasable Shares on the Record Date. No Purchasable
Shares will actually be issued by International to the Participating
Employees and in lieu thereof the Participating Employees shall be
entitled to receive from International, for each Purchasable Share of
International Common Stock, cash payment from UCRI of the amount
provided in Section 1.5 of the Merger Agreement.
SECTION 7.5 TRANSFER TO UCRI OF CORPORATE-OWNED LIFE INSURANCE POLICIES.
International shall take, or cause to be taken, all actions necessary and
appropriate to transfer ownership of any life insurance policies on the lives of
its executives (other than Xxxxx X. Xxxxxxx) owned by International to UCRI.
Section 7.6 Vacation Pay and Sick Leave
11
Pay. UCRI shall assume all liability for earned or accrued vacation pay and
banked or earned/accrued sick leave pay accrued by Foodservice Employees and
UCRI Employees through the Offer Closing Time. Vacation pay and sick leave for
Foodservice Employees after the Offer Closing Time will be provided pursuant to
Compass' vacation and sick leave policies.
SECTION 7.7 CHANGE OF PLAN SPONSOR. Prior to the Offer Closing Time,
International shall take such action as necessary to remove International or
Daka as sponsor and, if applicable, named fiduciary of the Benefit Plans listed
in Schedule 7.7, and name UCRI sponsor and named fiduciary of such Benefit
Plans.
SECTION 7.8 SEVERANCE PAY.
(a) The cessation of employment by individuals who, in connection
with the Distribution, cease to be employees of the International Group
and become employees of the UCRI Group, shall not be deemed a severance
of employment from either Group for purposes of any Benefit Plan that
provides for the payment of severance, salary continuation or similar
benefits. International, UCRI and Compass agree that none of the
transactions contemplated by this Agreement or the Merger Agreement
shall result in or be deemed a severance of employment from either Group
for purposes of any Benefit Plan other than the DAKA Savings Plan that
provides for payment of severance, salary continuation or similar
benefits and International shall take, or cause to be taken, all action
necessary and appropriate to amend the Daka International, Inc.
Severance Program for Eligible Associates (and any other similar Benefit
Plan) as may be necessary to assure compliance with this Section.
(b) UCRI and the UCRI Group shall assume and be solely responsible
for all liabilities and obligations whatsoever in connection with claims
for severance pay benefits without regard to when such claims are made
under the terms of the Daka International, Inc. Severance Pay Program
for Eligible Associates or any other severance plan or policy sponsored
by any member of the International Group prior to the Offering Closing
Time, including, without limitation, claims made by any individuals who,
in connection with the Distribution, cease to be employees of the
International Group, whether or not such individuals are offered or
accept employment with either Group. International shall be responsible
for the payment of severance pay benefits payable pursuant to any New
Welfare Plan that may be established after the Offer Closing Time to
provide severance pay benefits to Foodservice Employees at the time of
their termination.
SECTION 7.9 COLLECTIVE BARGAINING AGREEMENTS; LABOR RELATIONS MATTERS;
WITHDRAWAL LIABILITY.
(a) As of the Offer Closing Time, International and the
International Group shall retain and be responsible only for the
Collective Bargaining Agreements, and only to the extent such agreements
relate to the terms and conditions of employment of the Foodservice
Employees. UCRI and UCRI Group shall assume and be solely responsible
for all liabilities or claims made or arising under any collective
bargaining agreement covering the terms and conditions of any employee
of either Group relating to any period of time prior to the Offer
Closing Time, including, but not limited to, any back pay or benefits
due for periods prior to the Offer Closing Time as a result of good
faith bargaining without regard to when such agreement is reached.
(b) As of the Offer Closing Time, UCRI and the UCRI Group shall
assume and be solely responsible for any and all claims or proceedings
against International or Daka relating to the alleged violation of any
legal requirement pertaining to labor relations or employment matters,
including but not limited to any charge, claim or action or complaint
filed by an employee or union with the National Labor Relations Board,
the Equal Employment Opportunity Commission, the DOL or any other
federal or state body, any organizational activity or other labor or
unemployment dispute against International or Daka without regard to
when such charge, claim or action or complaint is brought or filed to
the extent that the allegations relate to any period prior to the Offer
Closing Time.
(c) As of the Offer Closing Time, UCRI and the UCRI Group shall
assume and be solely responsible for that portion of any withdrawal
liabilities arising at any time prior to and within five years following
the Offer Closing Time in connection with a Multiemployer Plan to which
International or Daka is required to contribute pursuant to the terms of
a Collective Bargaining Agreement listed on Schedule 7.9, which portion
is equal to the greater of (A) the "potential withdrawal liability"
disclosed in Schedule 4.2(l) of the Disclosure Schedule under Section
4.2(l) (i) of the Merger Agreement, if any amount is disclosed, and (B)
an amount that bears the same proportion to the total withdrawal
liability as the number of Foodservice Employees covered by such
Multiemployer Plan at the Offer Closing Time bears to the total number
of International or Daka
12
employees covered by such Multiemployer Plan on the date of notification
by such plan of such withdrawal liability.
SECTION 7.10 PRESERVATION OF RIGHTS TO AMEND OR TERMINATE BENEFIT PLANS.
Subject to the provisions of this Article, no provision of this Agreement,
including the agreement of International or UCRI that it or any member of the
International Group or the UCRI Group will make a contribution or payment to or
under any Benefit Plan herein referred to for any period or the agreement of
Compass to permit participation in or provide similar benefits to Foodservice
Employees, shall be construed as a limitation on the right of International or
UCRI, or any member of the International Group or the UCRI Group, or of Compass,
to amend such Benefit Plan or terminate its participation therein or change the
level or value of benefits provided thereunder, and no provision of this
Agreement shall be construed to create a right in any employee or former
employee or beneficiary of such employee or former employee under a Benefit Plan
which such employee or former employee or beneficiary would not otherwise have
under the terms of the Benefit Plan itself. Notwithstanding the above, however,
International and UCRI each agree that it shall not make or cause to be made any
amendments to any Benefit Plan, nor shall it terminate any Benefit Plan, in a
manner which would violate the covenants set forth in this Agreement, except as
may be required to comply with applicable law, but subject to the provisions of
this Article.
SECTION 7.11 OTHER LIABILITIES. As of the Offer Closing Time, UCRI shall
assume and be solely responsible for all earned salaries, wages, bonuses,
severance payments or other current or deferred compensation retirement, welfare
or fringe benefits of all UCRI Employees, regardless of whether earned or
accrued before or after the Offer Closing Time and of all Foodservice Employees
to the extent earned or accrued prior to the Offer Closing Time.
SECTION 7.12 COMPLIANCE. Notwithstanding anything to the contrary in this
Article, to the extent any actions of the parties contemplated in this Article
are determined prior to the Distribution to violate law or result in unintended
tax liability for Foodservice Employees or UCRI Employees, such action may be
modified to avoid such violation of law or unintended tax liability.
ARTICLE VIII
TAX MATTERS
SECTION 8.1 TAX MATTERS. Notwithstanding anything to the contrary in this
Agreement, liabilities of the parties for Taxes (as defined in the Tax
Allocation Agreement) are subject to the terms of the Tax Allocation Agreement.
ARTICLE IX
CONDITIONS
SECTION 9.1 CONDITIONS TO OBLIGATIONS OF INTERNATIONAL. The obligations of
International to consummate the Contribution and the Distribution hereunder
shall be subject to the fulfillment of each of the following conditions:
(a) All of the transactions contemplated by Article II shall have
been consummated.
(b) Compass, Compass Holdings and Compass Interim shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date,
and International shall have received a certificate signed on behalf of
Compass by the chief executive officer and the chief financial officer
of Compass to such effect.
(c) International shall have received opinions of Xxxxx Xxxxx
Mulliss & Xxxxx, L.L.P. and Freshfields, each dated the Closing Date, in
substantially the forms of EXHIBIT 9.1(C)(I) and EXHIBIT 9.1(C)(II),
respectively.
(d) Simultaneously with the Offer Closing, Compass shall have paid
to The Chase Manhattan Bank on behalf of International all Funded Debt
under the Credit Facility and secured a release of all Liens with
respect to Funded Debt.
(e) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of
the Contribution or the Distribution shall be in effect and no such
litigation or legal action shall have been threatened or shall be
pending. No action, suit or other proceeding shall be pending by any
Governmental Entity that, if successful, would restrict or prohibit the
consummation of the Contribution or the Distribution.
13
(f) Any applicable waiting periods under the HSR Act or the
Exon-Xxxxxx Amendment shall have expired or been terminated.
(g) The Form 10 shall have been declared effective by the
Securities and Exchange Commission.
(h) Compass Holdings shall have accepted for payment pursuant to
the Offer a number of validly tendered shares of International Common
Stock which, when added to the shares of International Common Stock then
beneficially owned by Compass, Compass Holdings and its affiliates or
Compass Interim, constitutes two-thirds of the shares of International
Common Stock then outstanding and represents two-thirds of the voting
power of the shares of International Common Stock then outstanding on a
fully diluted basis on the date of purchase.
(i) The representations and warranties of Compass contained in the
Merger Agreement shall be true and correct in all material respects.
(j) No statute, rule, regulation, decree, order or injunction shall
have been promulgated, enacted, entered, or enforced or any legal or
administrative proceeding initiated by any United States federal or
state government, governmental authority or court which would prohibit
the consummation of the Contribution, the Distribution, the Offer, or
the Merger.
(k) There shall not have been a Material Adverse Change (as defined
in the Merger Agreement) or any event that could reasonably be expected
to result in a Material Adverse Change.
(l) Xxxxx Xxxxxxx shall have entered into an employment agreement
with International and Daka in form and substance satisfactory to
Compass and Xxxxx Xxxxxxx shall not have indicated to International,
Daka or Compass that he does not intend to abide by the terms of such
agreement.
(m) Compass shall have paid to International the amount due under
Section 6.7(b) of the Merger Agreement.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 FURTHER ASSURANCES. Each party hereto shall cooperate
reasonably with the other parties, and execute and deliver, or use its
reasonable best efforts to cause to be executed and delivered, all instruments,
including instruments of conveyance, assignment and transfer, and to make all
filings with, and to obtain all consents, approvals or authorizations of, any
governmental or regulatory authority or any other Person under any permit,
license, agreement, indenture or other instrument, and take all such other
actions as such party may reasonably be requested to take by any other party
hereto from time to time, consistent with the terms of this Agreement, in order
to effectuate the provisions and purposes of this Agreement and the transfers of
assets and Liabilities and the other transactions contemplated hereby or in any
of the Ancillary Agreements.
SECTION 10.2 SURVIVAL OF AGREEMENTS. All covenants and agreements of the
parties hereto contained in this Agreement shall survive the Offer Closing Time.
SECTION 10.3 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Merger Agreement and the Ancillary Agreements shall constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof, superseding all previous negotiations, commitments and writings with
respect to such subject matter.
SECTION 10.4 EXPENSES. All fees and expenses incurred in connection with
the Merger, the Distribution, this Agreement, the Merger Agreement and the
transactions contemplated by this Agreement, the Merger Agreement and the
Ancillary Agreements shall be paid in accordance with Section 6.1 of the Merger
Agreement and Section 3.4 of the Post-Closing Covenants Agreement, whether or
not the Distribution is consummated.
SECTION 10.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES, AS TO ALL MATTERS, INCLUDING
MATTERS OF VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES.
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SECTION 10.6 NOTICES. Any notice, request, instruction or other document to
be given hereunder by any party to any other party shall be in writing and shall
be deemed to have been duly given (a) on the first business day occurring on or
after the date of transmission if transmitted by facsimile (upon confirmation of
receipt by journal or report generated by the facsimile machine of the party
giving such notice), (b) on the first business day occurring on or after the
date of delivery if delivered personally, or (c) on the first business day
following the date of dispatch if dispatched by Federal Express or other
next-day courier service. All notices hereunder shall be given as set forth
below, or pursuant to such other instructions as may be designated in writing by
the party to receive such notice:
If to a member of the International Group or Compass:
Compass Group USA, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: General Counsel
If to a member of the UCRI Group:
Daka International, Inc.
Xxx Xxxxxxxxx Xxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: General Counsel
SECTION 10.7 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented, and rights hereunder may be waived, only by a written
agreement signed by International, UCRI, Daka and Compass. No waiver of any
term, provision or condition of or failure to exercise or delay in exercising
any rights or remedies under this Agreement, in one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of such term,
provision, condition, right or remedy or as a waiver of any other term,
provision or condition of, or right or remedy under, this Agreement.
SECTION 10.8 SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of each party hereto and each of their respective successors and
permitted assigns, which shall include the entity resulting from the Merger, but
neither this Agreement nor any of the rights, interests and obligations
hereunder shall be assigned by (i) the UCRI Group without the prior written
consent of Compass or the International Group (which consent shall not be
unreasonably withheld) and (ii) the International Group or Compass, as the case
may be, without the prior written consent of the UCRI Group (which consent shall
not be unreasonably withheld). This Agreement is solely for the benefit of each
Group and is not intended to confer upon any other Person any rights or remedies
hereunder. The covenants and agreements of UCRI and its Subsidiaries contained
herein are an inducement to Compass and International to enter into the Merger
and may be endorsed by either entity following the Contribution and Distribution
and the Merger.
SECTION 10.9 ENFORCEMENT.
(a) SPECIFIC PERFORMANCE. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement, this being in addition to any other remedy to which they are
entitled at law or in equity.
(b) JURISDICTION. To the extent a court action is authorized above,
the parties hereby consent to the jurisdiction of the United States
District Court of Delaware. Each of the parties waives personal service
to any and all process upon them and each consent that all such service
of process be made by certified mail directed to them at their address
shown in Section 10.6 hereof. THE PARTIES WAIVE TRIAL BY JURY AND WAIVE
ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER.
SECTION 10.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 10.11 INTERPRETATION. When a reference is made in this Agreement to
a Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
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contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
SECTION 10.12 TERMINATION. In the event the Merger Agreement is terminated,
notwithstanding any provision hereof, this Agreement may be terminated and the
Distribution abandoned at any time prior to the Offer Closing Time by and in the
sole discretion of the International Board without the approval of any other
party hereto or of International's shareholders. In the event of such
termination, no party hereto shall have any Liability to any Person by reason of
this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
DAKA INTERNATIONAL, INC.
By: /s/ XXXXXX X. XXXXX
XXXXXX X. XXXXX
SENIOR VICE PRESIDENT
UNIQUE CASUAL RESTAURANTS, INC.
By: /s/ XXXXXX X. XXXXX
XXXXXX X. XXXXX
SENIOR VICE PRESIDENT
DAKA, INC.
By: /s/ XXXXXX X. XXXXX
XXXXXX X. XXXXX
SENIOR VICE PRESIDENT
COMPASS GROUP PLC
By: /s/ XXXXXXX X. XXXXXX
XXXXXXX X. XXXXXX
DIRECTOR
COMPASS HOLDINGS, INC.
By: /s/ XXXXXXX X. XXXXXX
XXXXXXX X. XXXXXX
DIRECTOR
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